PSALM sees Malaya plant sale this year

MANILA, Philippines - State-run Power Sector Assets and Liabilities Management Corp. (PSALM) expects the privatization of the 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal to proceed this year to be able to close the sale in 2018, its top official said.

PSALM officer-in-charge Lourdes Alzona said the asset sale remains on schedule as they are just waiting for the final word on the updated terms of reference to include the conversion provision of the power plant.

“The plant is scheduled for privatization this year. But we are waiting for the final wording of final transaction documents,” she said. “We have an arrangement in the board (to finalize that) until next month.”

“We can start this year. But in closing the sale, it will slide into next year. The bidding process usually takes three to six months,” she added.

In the revised terms of reference, the winning bidder of the Malaya plant should convert it from diesel to coal or liquefied natural gas (LNG).

“The Department of Energy’s direction on the plant is to make it a baseload plant in order to secure our generating capacity,” Alzona said.

Baseload power plants are power generating facilities that can operate reliably and efficiently, generating electricity 24 hours a day, seven days a week. This can be served by coal, LNG and nuclear plants.

Energy Secretary Alfonso Cusi previously announced the Malaya plant would be rebid in order to accommodate the agency’s request to include the conversion provision in the terms of reference.

“What the DOE wants is to make sure that when we bid it out, there is really energy production….That is 600 MW, we want that to replace 600 MW, because the power plant is counted as an available capacity,” Cusi said.

PSALM, the entity created by the Electric Power Industry Reform Act (EPIRA) to privatize government-owned assets, had set the auction on March 8. The asset will be sold on an “as is, where is” basis.

The sale has been reset to March 30 and then deferred until further notice to take into consideration the DOE policy to ensure sufficiency of power supply in the Luzon grid.

Currently, the Malaya TPP, which runs on diesel, is designated as a must-run unit (MRU) by the DOE to address supply deficiency when operating power plants in the grid suddenly bog down or become unavailable.

It will operate as an MRU until the DOE finalizes its privatization schedule.